The Financial Landscape of European Football
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The Financial Landscape of European Football
Foreword
The Financial Landscape of European Football > Foreword
Foreword (1/2)
Introduction COVID-19
The essence of exciting professional football competitions is having sporting merit The world at the beginning of this year looked very different. The COVID-19
and sporting ability as the deciding factor in winning or losing. This leads to pandemic surprised societies and the impact was and is still enormous for many,
competitions filled with matches where unpredictable outcomes are possible and including the entire football industry. All competitions were stopped, and football
where the excitement and passion for the fans lies in the possibility their side could showed a great level of adaptability and flexibility to allow many leagues to
triumph. resume their competitions, first with matches to be played behind closed doors
and then, where possible, with the gradual return of fans to the stadiums.
The objective of the European Leagues (EL), as representative of the domestic
league organisers, is to enhance and protect competitive balance within The sporting, financial and social impact is immense in the short term, while the
domestic football competitions. mid and long-term effects are still very uncertain because of the unpredictable
development of the virus. However, it is already clear that the pandemic will lead
At the end of 2019, the EL decided to make a study to better understand the to billions of lost revenue for football, with the consequence that hundreds of
financial landscape of European professional football and its impact on professional clubs of all sizes, playing in many different domestic competitions,
polarisation and ultimately sporting competitive balance. face serious negative financial (cash) issues.
The fight against the pandemic and the battle to safeguard our industry still needs
our full attention. If the logical consequence was to push back this study, the topic
and insights revealed by this work did not become any less relevant.
3 The Financial Landscape of European Football
The Financial Landscape of European Football > Foreword
Foreword (2/2)
The financial landscape of European football
KPMG was commissioned to provide data and analysis for the report which The cooperation between all football stakeholders to overcome the COVID-19
provides clear insights on the financial developments over recent years. All crisis has proven that it is possible to put individual interests aside and to find
available data used in the report is related to the pre-COVID-19 era, as well as all solutions for the benefit of professional football as a whole. Let this be the spirit
conclusions made from the report. The report mainly focuses on the financial and the motivation for collectively tackling and overcoming our future
landscape from a domestic top-tier league perspective. challenges.
The analysis does not solely reflect the 36 professional football leagues (29 top-tier The report is the result of the boundless efforts of many people, for which we owe
divisions) and associations of clubs from 29 countries which are members of the EL, them all gratitude and appreciation. Hopefully, you will study it with great interest.
but all 55 UEFA members. Given the fundamental (financial) differences between
the biggest and smallest leagues, a cluster approach was developed and Nyon, November 2020
implemented to facilitate the analysis.
The findings of the report will further help to define the direction and goals of our
Association and its Members. In these times of uncertainty, it is essential to blend
the values of European football – such as our meritocratic promotion and Lars-Christer Olsson Jacco Swart
relegation structure and the distribution of solidarity payments – with the forces of President Managing Director
change to ensure the game is healthy at all levels of the pyramid. More even
distribution of UEFA Club Competitions (UCC) revenue, enhanced
professionalisation of leagues and clubs, closer cooperation between all
stakeholders, and the sensible deployment of club budgets will be central to a
healthy future for European football.
4 The Financial Landscape of European Football
Executive Summary
The Financial Landscape of European Football > Executive Summary > Introduction
Introduction
The Biggest Market in the Greatest Game Growing Pains
Football is the world’s most popular sport and Europe is its largest market. Over the past two decades, the growth at domestic and international level has
Featuring more professional leagues and clubs than anywhere else on earth and been particularly rapid, leading to the expansion of club finances.
four in every 10 of the world’s professional players.
The three revenue streams driving this growth for clubs have been central league
Created by the Football Community revenue (from TV and league sponsorship), individual club commercial income
For more than a hundred years, this success has been the result of the choices (sponsorship and merchandising) and UCC distributions.
and actions of the whole football community – from players and fans, to coaches
and administrators. Together they have developed a European professional But this rapid commercial expansion has brought some growing pains with it.
football ecosystem that has generated mass appeal through its competitive Specifically, on-pitch performances and off-field financial records indicate that
balance – with opportunities for any single team to beat another, and for clubs to the gap is widening between clubs, which has brought concerns about
rise through the football pyramid to trophy-lifting glory. polarisation and competitive balance to the forefront of discussions between
football stakeholders.
The Appeal of Competitive Balance
This competitive balance, throughout the whole competition, has stimulated the Understanding Polarisation
highest aggregate attendance figures in the world, with approximately 103 million A degree of polarisation has always existed between and within leagues due to
football fans filling stadiums during the 2017/18 season across approximately local market and socioeconomic conditions, the heritage and longevity of
12,000 European league games played largely at weekends. With a further 10 leagues, and individual club popularity, but it has increased recently due to
million fans attending 735 UEFA Club Competitions (UCC) mid-week matches. TV the diverging scale of media markets in different countries, the unequal impact of
and media audiences are just as significant, with Ampere Analysis estimating that the forces of globalisation, and the changing model for UCC revenue distribution.
approximately a quarter of all expenditure on broadcast content in Europe is
allocated to football.
6 The Financial Landscape of European Football
The Financial Landscape of European Football > Executive Summary > Financial development of European football
Financial development of European football (1/4)
Overview
In general, the findings indicate that European football has continued to grow its Over the recent 10-year period, centralised revenues (league broadcasting,
revenues; however, the financial gaps both between and within leagues are UCC) and individual club (commercial) revenues have driven top-tier European
increasing. club football financial growth. In relation to the transfer market, growing transfer
spending at the top continues to support the financial ecosystem further down
An overarching theme is that there is a growing concentration of financial and it is now playing a more important role in club financial operations.
resources in the top clubs throughout the leagues in Europe. While the
phenomenon of having financial and sporting disparities between clubs is not Although European football was becoming more profitable in recent years, nearly
new, the growth rate of this inequality is increasing and represents a worrying half of all the clubs still operate with deficits.
trend.
A consistent increase of players wages (almost doubling during the past decade)
Unlike other industries, the football industry thrives on, and needs, healthy levels of is the main cost driver for clubs, resulting in persistent unsustainable business
competition between its participants, whether in terms of a title race, a relegation models.
battle or qualification for UCC. When financial disparities become too large, this
becomes increasingly difficult to achieve. The variance in revenues between leagues is largely explained by domestic
socio-economic and cultural realities. However, professional league/club
structures as well as league and club appeal are also fundamental to financial
development, especially in relation to non-domestically generated revenues.
7 The Financial Landscape of European FootballThe Financial Landscape of European Football > Executive Summary > Financial development of European football
Financial development of European football (2/4)
Cluster-based analysis
The landscape of top-flight European football consists of many domestic leagues CLUSTER A CLUSTER B CLUSTER C CLUSTER D CLUSTER E
that are at different stages of development. Due to these differences, we opted 5 leagues 6 leagues 11 leagues 11 leagues 22 leagues
to showcase the recent financial development through a clustering approach. (98 clubs) (96 clubs) (~150 clubs) (~140 clubs) (~230 clubs)
The top tiers of UEFA’s 55 member associations were divided into five distinct Albania,
Andorra,
groups or ‘clusters’ based on their average operating revenue across the last five Armenia,
full financial years. Bosnia-
Herzegovina,
Estonia, Faroe
There has been impressive revenue growth, but this trend is not widespread Azerbaijan, Islands,
Austria,
Belarus, Georgia,
throughout the whole ecosystem. However, it should be noted that there are Denmark,
Bulgaria, Gibraltar,
Belgium, Greece,
large differences between and within leagues that may not be fully represented Croatia, Iceland,
England, Netherlands, Hungary, Israel,
Cyprus, Czech Kosovo, Latvia,
using average figures. The result is that the financial gaps between most clusters France, Portugal, Kazakhstan,
Republic, Liechtenstein*,
Germany, Italy, Russia, Norway,
are increasing. The main reasons for the increases between and within clusters Finland, Lithuania,
Spain Switzerland, Poland,
Romania, Luxemburg,
are revenues from centralised domestic league broadcasting deals, individual Turkey Scotland,
Serbia, Macedonia,
Sweden,
club commercial contracts and centralised international UCC distributions to Slovakia, Malta,
Ukraine
Slovenia Moldova,
clubs. Montenegro,
Northern
Ireland,
At the very top, if we consider the last decade (since FY2009), the revenues of the Republic of
10 financially most dominant clubs in Europe are growing faster than the rest of Ireland, San
Marino, Wales
the professional clubs across the continent.
Note: European Leagues members are highlighted above in bold. Please see Appendix for a detailed list
of European Leagues’ members, including Associate Members and Development members.
*Liechtenstein has been included separately from a country analysis perspective.
8 The Financial Landscape of European FootballThe Financial Landscape of European Football > Executive Summary > Financial development of European football
Financial development of European football (3/4)
Centralised and individual club revenue streams, wages and profitability:
Centralised revenues: League broadcasting
• The value of league broadcasting rights is driven by different socio-economic • The importance of UCC revenues as part of the total league revenues has
and cultural factors, including the popularity of football, domestic market size, grown significantly and impact all leagues. In addition, it was found that during
league and club appeal, professionalisation of leagues, media market the previous 2015-18 UCC cycle, in each league, the top three clubs received
competition and international interest. These drivers have mostly benefited the (on average) 85% of all UCC revenues distributed in the same country. These
top leagues. The uneven growth of broadcasting revenues has resulted in factors contribute to further increase financial differences between and
significant differences between and within leagues. This is evident when imbalances within leagues. Qualifying round payments to clubs have the same
analysing league turnover and the mounting share broadcasting is playing in distortive effect in smaller leagues as UCL and UEL payments have in bigger
league revenues, especially in the bigger countries that have also invested domestic leagues.
strategically for the medium and long term. Leagues, in general, aim to
distribute broadcasting revenues to foster increased competitive balance in Individual club revenues: Commercial
their competitions. • Clubs from top leagues and very small leagues have registered growth in their
commercial revenues but it is noticeable that such growth is more evident
Centralised revenues: UEFA Club Competitions (UCC) among clubs from the top leagues. Although the share of club commercial
• Over the past 10 years, UCC revenues have been growing the fastest. As a income at a cluster level has fallen, it remains a key source of differentiation
consequence, UCC distributions to clubs - driven by the evolution of the UCC within all leagues, especially for top clubs, where individual club differences
distribution models and access list - are increasingly impacting all levels of the drive premium values.
ecosystem. As from the current 2018-21 UCC cycle, UEFA Champions League
(UCL) revenues have grown much more than UEL, while solidarity payments
9 have fallen behind and remain small. The Financial Landscape of European FootballThe Financial Landscape of European Football > Executive Summary > Financial development of European football
Financial development of European football (4/4)
Individual club revenues: Matchday Wages and Profitability
• Although its relative percentage share has remained flat, matchday revenues • Profitability remains a challenge for the industry, as clubs carry high fixed
remain fundamental for financial and non-financial (i.e. fan appeal) reasons for player wage costs compared to revenues that can fluctuate significantly
all clubs in all clusters. For leagues with lower centralised broadcasting season to season. On aggregate, player wages have been continuously
revenues, matchday revenues can represent an even more important income increasing and have almost doubled during the past 10 years. Wages are
stream for their member clubs. pushed upwards by clubs’ pursuit of domestic and, increasingly, UCC-focused
success. This has resulted in the wage-to-revenue ratio, in general, rising over
Individual club revenues: Transfers the period analysed.
• The growth and net spending on the transfer market is driven by those clubs
belonging to the top leagues. The redistribution of transfer fees continues to • Financial regulations, both domestic and at UEFA level, have guided clubs to
support the wider ecosystem with clubs in the top leagues acting as ‘net more sustainable models but considerable differences exist between and
spenders’. At the same time, clubs from other leagues remain ‘net sellers’ and within clusters. Out of 54 leagues, only 17 have managed to generate an
the transfer market has increasingly become an important source of income in average positive net profit over the 5-year period FY2014 – FY2018. The
medium and small leagues. presence of outlier clubs, in particular in medium and small leagues, can drag
down figures.
• With 37 leagues across the whole of European football with negative
profitability, the issue is not league-specific but club-specific and industry-wide.
A combination of factors impact club profitability; however, the level of
professionalism in league/club structures and management are a key
10 determinant. The Financial Landscape of European FootballThe Financial Landscape of European Football > Executive Summary > Finance and Sporting Performance
Finance and Sporting Performance
Financial differences impact competitive balance in professional club The key findings indicate a greater dominance by a fewer number of clubs in
competitions and can undermine competitiveness. The report, based on data and many domestic leagues and the sporting advantage these top clubs have from
analysis from the International Centre for Sports Studies (CIES) and 21st Club, looks regular participation in UCC competitions.
at both title races and differences in team quality to analyse competitive balance
within the leagues and the relationship between financial strength and sporting These indicators are:
performance. • A sharp decline in the number of different domestic champions.
• Teams crowned domestic champions achieved a record
The analysis reconfirms that financial performance impacts and is impacted by number of points per game.
sporting performance with on-pitch success more likely when clubs have more • The percentage of domestic league games remaining at the
revenue to invest in their playing squads. point of title win increased.
• The points gap between the champions and runner-up teams
In addition, it was identified that domestic leagues with less revenue have a also increased.
bigger difference in the on-pitch quality between any two consecutively ranked • The advantage clubs have in domestic competitions from
teams within their competitions. playing regularly in UCC.
11 The Financial Landscape of European FootballThe Financial Landscape of European Football > Executive Summary > Outlook
Future outlook will depend on tackling challenges collectively
The Financial Landscape of European Football highlighted many positive aspects • Wage growth: The escalation of wages to levels that in some cases exceed
that professional club football in Europe can and should be proud of. However, club revenues creates an unsustainable long-term business model which poses
there are important and difficult challenges to consider as we plan for the future. systemic risks.
A collective approach from all stakeholders will be necessary to overcome these
challenges: • Overarching challenge of virtuous/vicious cycle: Supporting and maintaining
virtuous cycles in European football while negating the emergence and
• Protecting competitive balance: Match unpredictability and competitiveness growth of vicious cycles.
throughout the competition are fundamental to ensuring long-term success of
club competitions and the interest of fans. The trend points to greater The unprecedented shock of COVID-19 has magnified these issues, but the
dominance by a fewer number of clubs in many competitions. extraordinary levels of cooperation amongst all stakeholders in the emergency
response to the pandemic should give us all hope for the future.
• Growing revenue gap between top clubs and others: The financial polarisation
between clubs competing domestically and internationally is increasing and Now, the challenge for these stakeholders is to come together and plot a
accelerating. sustainable path forward for European football at a time of paradigm-shifting
digitisation, rapidly changing audience behaviour and extreme economic
• Distortive impact of UCC payments: Club distributions from UCC are having a uncertainty. It will depend upon the ability of the footballing stakeholders to take
greater distortive effect in domestic leagues due to the increased size and bold and potentially difficult decisions that are genuinely in the interests of the
concentration of these payments to a small number of top clubs in each game. Not individual interests but collective interests. Not for the short term but for
league. the long term. Not as owners but as custodians.
12 The Financial Landscape of European FootballContent
Financial Commercial Transfer Revenue Finance and
Development of Revenue and Expenditure Sporting
European Football: Performance
Overview
19-27 41-44 56-60 69-79
Cluster-based Matchday Revenue Wages Overview of
analysis European
Professional
Football
28-34 45-48 61-64 80-87
League UEFA Club Profitability Conclusions
Broadcasting Competitions
Revenue Revenue
36-40 49-55 65-68 88-92
The Financial Landscape of European FootballThe Financial Landscape of European Football > Content
· Foreword 02
· Executive Summary 05
· Financial development of European football 18
- Overview 19
- Cluster-based analysis 28
- Analysis by revenue and expenditure streams 35
- League broadcasting revenue 36
- Commercial revenue 41
- Matchday revenue 45
- UEFA Club Competitions revenue 49
- Transfer revenue and expenditure 56
- Wages 61
- Profitability 65
· Finance and Sporting Performance 69
· Overview of European professional football 80
· Conclusions 88
· Appendix 93
34
15 The Financial Landscape of European FootballThe Financial Landscape of European Football > Content
Structure of the Report
The report on The Financial Landscape of European Football, based on data and analysis by CLUSTER A CLUSTER B CLUSTER C CLUSTER D CLUSTER E
KPMG, covers all European domestic top-tier professional football leagues where over 700 5 leagues 6 leagues 11 leagues 11 leagues 22 leagues
clubs compete from 55 countries. The analysis is structured in five different sections: (98 clubs) (96 clubs) (~150 clubs) (~140 clubs) (~230 clubs)
Albania, Andorra,
Armenia, Bosnia-
Section 1, the focus of the report, delves into the financial development of European football, Herzegovina,
beginning with an overall financial review to provide background and context, before moving Estonia, Faroe
Islands, Georgia,
onto more detailed cluster-based analysis of all domestic top-tier leagues in Europe. A five- Austria, Denmark, Azerbaijan, Gibraltar, Iceland,
cluster approach (A, B, C, D & E), based on the average revenue of clubs, is used to group Belgium, Greece, Hungary, Belarus, Bulgaria, Kosovo, Latvia,
England, France, Netherlands, Israel, Croatia, Cyprus, Liechtenstein*,
leagues. The timeline used in the report includes both a more recent 5-year and a longer 10- Germany, Italy, Portugal, Russia, Kazakhstan, Czech Republic, Lithuania,
year period to derive insights. Spain Switzerland, Norway, Poland, Finland, Romania, Luxemburg,
Turkey Scotland, Serbia, Slovakia, Macedonia,
Sweden, Ukraine Slovenia Malta, Moldova,
This section primarily focuses on the different centralised revenues (league broadcasting, UCC) Montenegro,
Northern Ireland,
and individual club (commercial, matchday, transfers) revenue streams. In addition, the Republic of
analysis covers club operating expenditures (transfers, player wages and non-wage) that Ireland, San
Marino, Wales
comprise the income statements of clubs. Each revenue or expenditure stream is
Note: European Leagues members are highlighted above in bold. Please see Appendix for a detailed list
accompanied by descriptions of the various drivers and factors that affect them. of European Leagues’ members, including Associate Members and Development members.
*Liechtenstein has been included separately from a country analysis perspective.
Section 2 is about financial and sporting performance. The relationship between these two
topics and its impact on competitive balance are addressed.
Section 3 provides a brief overview of European professional football including the position of
the domestic professional leagues being at the heart of the European football ecosystem.
Section 4 includes a conclusion containing the key findings.
16 The Financial Landscape of European Football
ContentsThe Financial Landscape of European Football > Glossary
Glossary of terms
Broadcasting revenue The media broadcasting revenue received by clubs due to their CAGR Compound Annual Growth Rate
participation in national leagues and other domestic
competitions. The domestic deals and – where they exist – the WTR Wage-to-Revenue (ratio)
sale of media rights to international territories are both covered.
Deals related to UCC are not part of this revenue stream.
Commercial revenue Merchandising, shirt sponsors, kit suppliers, stadium naming rights
WLF World Leagues Forum
partners and other commercial partnerships.
All income from single and season ticket sales, matchday EL European Leagues
Matchday revenue
hospitality and F&B (Food & Beverage).
Net Profit The final result after all costs, gains and losses.
WFCA World Football Club Association
Other revenue Miscellaneous items, such as grants, donations and other
exceptional revenue. ECA European Club Association
Solidarity payments The solidarity system of UEFA distributes solidarity payments to
every national federation; the exact amount is determined by a
variety of factors; countries which had a representative in the Fédération Internationale des Associations de
UCL group stages receive a higher amount. Generally this FIFPRO
Footballeurs Professionnels
income is distributed to clubs who did not play in either the UCL
or UEL group stages. This covers around 650 clubs, versus the
32+48 which are represented in group stages every season.
FSE Football Supporters Europe
UEFA Club Competitions Revenue distributed by UEFA in the form of competition
payments (participation, performance, market pool) to clubs
(UCC) revenue SDE Supporters Direct Europe
who play in the Champions League (UCL) or Europa League
(UEL) and in the form of solidarity payments (Qualifying Rounds
and Non-Participating Clubs) to those who do not.
Wages Basic salaries, performance bonuses, social security and pension
contributions paid to all employees, including players,
backroom staff and employees.
Note: Growth or cumulative values on pages of this report may not sum to total. This is due to
rounding only.
17 The Financial Landscape of European Football
ContentsFinancial development of European football
Overview
The Financial Landscape of European Football > Financial development of European football > Overview
Overall financial analysis framework
This report, reflecting data availability, primarily focuses on the different centralised (league
broadcasting, UCC) and individual club (commercial, matchday, transfers) revenue streams and
club operating expenditures (transfers, wages and non-wage) that comprise the income
statements of clubs, to understand the financial landscape and health at a league level of top-tier
professional club football in UEFA’s 55 member countries.
The financial analysis framework and timelines used are as follows:
• Overall, a 10-year period (Financial Years - FY2009 to FY2018) is used to measure the key
indicators and observe trends.
• Within the cluster-based analysis sections, a 5-year period (FY2014 to FY2018) is used to
analyse revenues, wages and profitability in further detail.
• For transfers, a 10-year period was used from season 2010/11 due to data availability.
In addition to the above time periods, a five-cluster approach is used to group leagues to
facilitate analysis given the significant differences in the sizes of the countries and therefore
respective clubs that form the top-tier leagues in Europe.
Finally, it should be noted that the report does not seek to provide a holistic overview of financial
health as the analysis does not include Operating Expenditure (OpEx), Capital Expenditure
(CapEx), Cash Flow Statements and Balance Sheet analysis.
Source: KPMG Data & Analysis
20 The Financial Landscape of European Football
ContentsThe Financial Landscape of European Football > Financial development of European football > Overview
Centralised (league broadcasting, UCC) and individual (club commercial) revenues drive
top-tier European club football revenue growth
Evolution of revenue categories
With an increase in all revenue streams, total revenue* rose from €11.7 billion in FY2009 to €21
billion in FY2018. In absolute terms, broadcasting and club commercial/other revenue have grown 21,083
20,102
20.000 18,466 2.092
most significantly, while UCC has grown fastest on a CAGR basis across the 55 European leagues. 16,865
15,764 3.138
15.000
€ million
• League broadcasting and club commercial revenue grew by 94% and 82% respectively, 11,719
7.890
10.000 692
indicative of the development of the European game and advancements in the commercial 2.481
and broadcasting proposition. Together, these two revenue sources are responsible for 75% of 4.076
5.000
total revenue in FY2018, up from 72% in FY2009. 7.965
4.372
- ………..…..
• Since FY2009, the share of UCC revenue increased from around 6% to 10% in FY2018, while FY2009 FY2014 FY2015 FY2016 FY2017 FY2018
share of matchday revenue decreased from 21% to 15% over the same period.
Commercial and other Broadcasting Matchday UCC
While league broadcasting and club commercial/other have grown most on an absolute basis, Share of revenue categories from total
UCC has grown the most in relative terms based on growth rates: 100%
6% 10%
90%
21%
80% 15%
Compound Annual Growth Rates (2009-2018): 70% 37%
35%
60%
UCC: 13.1% 50%
40%
Broadcasting: 7.6% 30% 38% 38%
20%
Commercial/Other: 6.9%
10%
Source: KPMG Data & Analysis 0% ……….…..
FY2009 FY2014 FY2015 FY2016 FY2017 FY2018
UCC income, which is distributed mostly to the top clubs, has already substantially increased
Commercial and other Broadcasting Matchday UCC
from season 2018/19 (+ €700m) and is forecasted to continue growing in the 2021/24 cycle.
Source: UEFA Club Licensing Benchmarking Report / KPMG Data & Analysis
21 * European club football = 55 UEFA top tiers within the scope of this study The Financial Landscape of European Football
ContentsThe Financial Landscape of European Football > Financial development of European football > Overview
Growing transfer spending continues to financially support ecosystem, and plays a more
fundamental role in club finances
Transfer spending is not homogeneous in each country, with some that could be labelled ‘net
buyers’ and others ‘net sellers’ based on the strategies adopted by clubs in those leagues. This Transfer revenue, spending and overall balance
8.017
netting of buyers against sellers across the football ecosystem continues to support the transfer of 8.000
wealth between clubs and leagues. With the overall increase in transfer spending reaching a
record of €8 billion in FY2018, many ‘net seller’ clubs now see this revenue stream as an additional 6.037
vital source of income. 6.000
• Overall transfer spending has been higher than transfer revenue, resulting in a negative
transfer balance of €2 billion in FY2018, slightly below 10% of total operating revenue. 4.000
• The €2 billion negative transfer balance is the result of clubs in the biggest leagues being ‘net 2.996
2.542
€ million
buyers’, purchasing players from throughout the football ecosystem.
2.000
• However, it should be noted that within leagues and between clubs there are also
considerable differences in club spending power when it comes to the transfer market,
resulting in ‘net buyers’ and ‘net sellers’ in the same league. -
However, given the inherent characteristics of the transfer market and the ‘chain reaction’ of -454
payments between clubs, relying too heavily on this revenue stream could expose a club to
-2.000
financial challenges. As such, a prudent approach should be taken by clubs to ensure that an -1.980
appropriate transfer strategy is put in place, depending on whether the club is on the buying or
selling side of the market. -4.000
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
Transfer revenue Transfer spend Transfer balance (revenue-spend)
Source: UEFA Club Licensing Benchmarking Report / KPMG Data & Analysis
22 The Financial Landscape of European Football
ContentsThe Financial Landscape of European Football > Financial development of European football > Overview
Operating costs rose by 70% with near doubling of wages being main driver
Total operating expenses stand at almost €20.4 billion in FY2018, an increase of
Total operating expenses & Revenue : wages and non-wages
approximately 70% from €12 billion in FY2009, with player wages, the largest component,
nearly doubling to €13.5 billion. With regard to non-wage operating costs, these grew by 54% 25.000
to support and develop clubs’ advancements in off-pitch operations and professionalism.
20.387
• Player wages increased by €6 billion over the analysed period. The top 10 leagues 20.000
account for €5.5 billion (91%) of the increase while the remaining 45 leagues make up
€0.5 billion. Interestingly, there were 7 medium and small leagues that recorded falls in
€ million
aggregate wages levels indicating not all leagues experienced growth.
15.000
13.472
• Within leagues, spending on player wages is driven by clubs’ desire to achieve sporting
11.977
success domestically and internationally, to create additional revenue opportunities
(virtuous cycle) or to avoid losing revenues through, for example, avoiding relegation
10.000
(vicious cycle). However, overspending to stay competitive can lead to unsustainable
wage-to-revenue ratios if not managed with appropriate safety measures. 7.488
6.915
5.000 4.488
Managing relatively fixed operating costs (in particular long-term player contracts) against
more variable revenues is a difficult challenge for all clubs. Club profitability can easily be
distorted season by season if annual income fluctuates significantly, leaving the football
ecosystem potentially exposed from a financial risk management perspective. -
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
Total operating expenses Wages Costs
Non-wage operating costs Revenue (EUR m)
Source: UEFA Club Licensing Benchmarking Report / KPMG Data & Analysis
23 The Financial Landscape of European Football
ContentsThe Financial Landscape of European Football > Financial development of European football > Overview
Although European club football has turned profitable in recent years, half of top-tier clubs
still operate with deficits
The implementation of UEFA Financial Fair Play Regulations in 2011 along with domestic league Net profit/loss and Wage-To-Revenue ratio
cost-control mechanisms played a major role in regulating club expenditure. A significant 1.000 66%
improvement in profitability from FY2012 can be seen. 579
• At an aggregate level top-tier European club football turned profitable for the first time in 500 65%
140
FY2017 reaching +€579 million (with 54% of clubs being profitable) after six years of recovery
63,9%
from a low of -€1.7 billion in FY2011. However, in FY2018 the percentage of profitable clubs - 64%
63,9%
€ million
fell from to 51%, indicating that half of all clubs are still operating with deficits, showing that
there is no room for complacency. -500 -324 63%
-460
• Expenditure on player wages is an important determinant of profitability. The wage-to-
-1.000 -792 -789 62%
revenue (WTR) ratio reflects the percentage of revenue allocated to paying players which
-1.076
has fluctuated between 61% and 65% over the period, ending at 64%. -1.163
-1.500 61%
Although the overall picture is much more positive that in the past, significant differences exist
-1.634 -1.670
between and within leagues. -2.000 60%
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
• First, not all clubs can grow revenues at the same pace as others.
Net profits (EUR m) Wage-To-Revenue ratio
• Second, consistently spending more than you earn, in order to try and be more successful
Source: UEFA Club Licensing Benchmarking Report / KPMG Data & Analysis
(i.e. utility maximisation), can lead to long-term profitability/sustainability issues.
• Third, operating without a strong balance sheet and cash reserves to draw down upon in
case of poor performance or external shocks to the system can threaten the sustainability of
clubs going forwards and the ecosystem as a whole.
In later sections we will analyse these differences between leagues highlighting the challenges
clubs face.
24 The Financial Landscape of European Football
ContentsThe Financial Landscape of European Football > Financial development of European football > Overview
Balance sheet health shows positive trend but unsustainable business models persist
Financial Fair Play (FFP) has positively impacted the improvement in clubs’ balance sheets
Total assets and balance sheet health
through, for example, providing protection to creditors, encouraging self reliance on own
60 1,8
revenues and fostering responsible spending. FFP has also contributed to limiting major losses and
the piling up of soft loans by requiring owners to inject permanent capital. However, even with 50 1,32 1,5
these positive developments, with half of clubs operating with deficits unsustainable operating
Assets to liabilities
40 1,10 36,8 1,2
models remain a concern for the strength of the football industry as whole. 32,7
€ billion
29,7
30 27,4 0,9
23,2 24,3 24,8
• Total Balance Sheet Assets have increased by 80% from €20.5 billion to €36.8 billion, with a 20,5 21 21,8
CAGR of 6.7% between FY2009 and FY2018. Driven by increased transfer spending, the book 20 0,6
value of player assets (Intangible Assets) has grown from €4.9 billion to €10.8 billion overtaking
10 0,3
the book value of fixed assts (e.g. training ground, stadium) which increased from €5.6 billion to
€9.6 billion. 0 -
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
• Total Liabilities have grown by 49%, while total Equity surged by 400% up to €9 billion in FY2018,
illustrating the reliance in shareholder investment in clubs over debt financing arrangements. Total assets Balance sheet health (assets to liabilities ratio)
• Consequently, the Assets/Liability ratio stands at 1,32 (FY2018), which although positive, Source: UEFA Club Licensing Benchmarking Report / KPMG Data & Analysis
indicates the relatively low liquidity position of football clubs especially when further analysis
shows the large variation - from 0.32 to 2,3 - across all leagues in Europe.
Cash – Liquidity Position:
A fall in revenues and/or transfer devaluations could lead to bankruptcies, without appropriate • In relation to liquidity, a club’s cash position helps it pay for its debts; during an
safety belts, due to long-term wages/costs against short-term cash shortages. A self-sustainable economic industry downturn or external negative shock, clubs might struggle
to maintain sustainability in the face of significant revenue losses and possible
approach, prioritising cost management to improve cash positions versus relying on owner capital devaluation of players, which could in turn trigger lower transfer fees and a
injections or external investor financing, is required to increase the resilience of the ecosystem. lower number of transfers.
25 The Financial Landscape of European Football
ContentsThe Financial Landscape of European Football > Financial development of European football > Overview
Domestic socio-economic and cultural realities largely explain variance in revenue
between leagues
The financial development of the football industry in each national market is governed largely by
the socio-economic realities of that country. Even though matches can be broadcast
REGRESSION MODEL
internationally, the size of the population and the wealth (GDP) of its inhabitants are still important
Relationship between GDP and Average Revenue per Club
aspects that can determine how much a domestic football market could potentially grow. (top-tier football clubs without UCC income – 2018)
• Running the regression model (see appendix for methodology) on all 55 UEFA member 300
countries results in an R² of 72%. This means that according to the model, GDP can explain up
to 72% of the variance that occurs in the average club revenue between European top-tier 250
Average operating reveue per club
leagues.
• However, GDP – as a proxy for 200 R² = 72%
(€ million, FY2018)
financial wealth – does not
‘Line of best fit’
explain all differences. There 150
50
are leagues that are outliers,
i.e. located far from the ‘line of 40 100
best fit’, implying that although
GDP is indeed a main factor, 30
there are other important 50
domestic factors (e.g. 20
social/cultural, league appeal) -
as well as global factors (e.g. 10 - 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0
international broadcasting) Total GDP of country (current USD trillion, 2018)
-
that will explain the ultimate
- 0,2 0,4 0,6 0,8 1,0
differences between leagues.
Source: KPMG Data & Analysis
26 The Financial Landscape of European Football
ContentsThe Financial Landscape of European Football > Financial development of European football > Overview
Professional league and club structures underpin financial development
The degree of professionalisation of league and club structures also influences the ability to generate and grow revenue, and contributes to explaining some of the variation between leagues. The
table below highlights some of the key areas from a league and club perspective.
Leagues and clubs must continue to improve and innovate to keep up with new trends in the media and technology landscape, as well as longer-term societal changes, such as demographic
and cultural shifts, which will impact its relationship with its fans and thereby, also, its financial development.
LEAGUE AND CLUB STRUCTURES: LEAGUE CLUB
Degree of Professionalisation
GOVERNANCE Governance structure Legal form; organigram; organs; leadership; management; controls Legal form; shareholders; organs; organigram; leadership; mgmt.; controls
Member representation Club representation Fan/shareholder representation
Expertise committees League commissions; club working groups Strategic vs. operational working groups
Decision-making Committees; authorities; quorum Committees; authorities; quorum
INTERNAL Divisions/Departments/ Sport: Football; Youth; Club Licensing; Fan; Certification Sport: Football; Youth; Fan Affairs; Medical; Science(Nutrition); Analysts; Scouting
BUSINESS SETUP Workforce Business: Legal; Finance; Business Intel.; Stakeholder Affairs; Communication; HR Business: Legal; Finance; Business Intel.; Stakeholder Affairs; Communication; HR
INTERDEPENDENT
(inhouse vs. external
Commercial: Audio-visual; Production; Distribution; Marketing; Sales; Events; Intl. Commercial: Marketing; Merchandise; Sponsoring; Content; Internationalisation
expertise)
Value Chain Sporting: Regulatory; Competition organisation Sporting: Player recruitment; development; sporting/business ROI
(inhouse vs. external Commercial/Media (league rights): Sells broadcasting rights on behalf of Commercial (club rights): Sells brand and other marketing IP, including
expertise) participating clubs. Sells sponsorship and other league-related IP rights sponsorship IP rights
Content: Centrally-managed rights offer exclusivity to high-quaility sports Commercial rights and audience: Unique opportunity to reach target audiences
VALUE B2B content, business intelligence data and local/global exposure to boost sales and brand awareness utilising various
PROPOSITION Commercial rights and audience: Unique opportunity to reach target audiences assets, data sources and touchpoints provided by the club
and local/global exposure to boost sales and brand awareness
Opportunities for diversification and digitalisation Community: Connect people who share the same passion and values with the
B2C Content and merchandise: Access to content and merchandise to boost fan sense of belonging to an exclusive community
engagement and strengthen connection with and loyality of fans Content and merchandise: Access to content and merchandise to boost fan
Reliability: Organize the league and matches with integrity and safety standards engagement and strengthen the connection and loyality of the fans
Strategic approach; assets; target market/ groups; stakeholder/consumer Strategic approach; assets; target market/ groups; stakeholder/consumer
EXTERNAL Leverage / Accelerator
management; monetisation management; monetisation
BUSINESS SETUP
Source: European Leagues
27 The Financial Landscape of European Football
ContentsCluster-based analysis
The Financial Landscape of European Football > Financial development of European football > Cluster-based analysis
Approach to cluster analysis
The landscape of top-flight European football consists of many domestic leagues that are at
different stages of development. They display a diverse range of characteristics, especially
regarding their size (number of clubs), format and the length of their seasons.
Some countries, especially in Northern Europe, organise their competitions on a spring-autumn
calendar, as opposed to the more common autumn-spring system. Furthermore, the socio-
economic and cultural situation, league appeal and domestic media market context of
European leagues are also quite varied.
• Due to these differences, we opted to showcase the recent financial development through
a clustering approach, which is consistently used throughout this report. The top tiers of
UEFA’s 55 member associations were divided into five distinct groups or ‘clusters’ based on
CLUSTER A CLUSTER B CLUSTER C CLUSTER D CLUSTER E
their average operating revenue across the last five full financial years (FY2014, 2015, 2016,
5 leagues 6 leagues 11 leagues 11 leagues 22 leagues
2017, 2018). This methodology alleviates the distorting effect of one or two unusually good or (98 clubs) (96 clubs) (~150 clubs) (~140 clubs) (~230 clubs)
bad years in terms of total revenue. Moreover, this five-year period includes seasons from two Albania, Andorra,
different UEFA club competition broadcasting cycles. Armenia, Bosnia-
Herzegovina,
Estonia, Faroe
▪ Cluster A → leagues where average club revenue was above €50 million per Islands, Georgia,
season Austria, Denmark, Azerbaijan, Belarus, Gibraltar, Iceland,
Belgium, Greece, Hungary, Bulgaria, Croatia, Kosovo, Latvia,
England, France,
Netherlands, Israel, Kazakhstan, Cyprus, Czech Liechtenstein*,
▪ Cluster B → between €20 and 50 million Germany, Italy,
Portugal, Russia, Norway, Poland, Republic, Finland, Lithuania,
Spain
Switzerland, Turkey Scotland, Sweden, Romania, Serbia, Luxemburg,
▪ Cluster C → between €5 and 20 million Ukraine Slovakia, Slovenia Macedonia, Malta,
Moldova,
▪ Cluster D → between €1.5 and 5 million Montenegro,
Northern Ireland,
Republic of Ireland,
▪ Cluster E → below €1.5 million San Marino, Wales
Note: European Leagues members are highlighted above in bold. Please see Appendix for a detailed list of
European Leagues’ members, including Associate Members and Development members. *Liechtenstein has
been included separately from a country analysis perspective.
29 The Financial Landscape of European Football
ContentsThe Financial Landscape of European Football > Financial development of European football > Cluster-based analysis
Large differences in revenue stream mix between clusters
An overview of the five clusters shows a very diverse picture, with significant differences in the relative share of the various Centralised versus Individual revenue streams clubs rely on.
Centralised Revenue Sources: Broadcasting / UCC Individual Club Revenue Sources: Commercial / Matchday / Other
• The share of broadcasting revenue diminishes as we move down the clusters, with a noticeable drop • Except for Cluster A, the relative share of Commercial revenue decreased in every
from 44% (A) to 21% (B) and then a range of 12-2% for C, D and E in FY2018. Medium/small leagues other cluster as clubs were unable to maintain commercial revenue growth alongside
have challenges when marketing their media rights: smaller domestic target audience sizes and a lower increases in other revenue streams.
international profile can limit growth. The opposite is true for larger leagues, which have successfully
• As of FY2018, Matchday income share is consistent across the clusters A, B and C (with
grown their broadcasting revenues to remarkable levels.
range of 15%-21%), highlighting the importance of this revenue source, especially for
• The proportion and weight of UCC income as a key revenue source for clubs has grown for all clusters. medium-sized leagues.
In FY2018 Cluster A’s share (8%) is more limited due to the absolute growth of other revenue streams.
• The relevance of Other revenue increases as you move down the clusters. This is
However, for the other clusters, especially clusters D and E, the share of UCC income has increased to
partially due to (public) grants and other donations that clubs rely on in these leagues.
approximately 30% and will increase further with the new UCC cycle from season 2018/19.
Revenue mix evolution by cluster
Cluster A Cluster B Cluster C Cluster D Cluster E
100% 100% 100% 100% 100%
90% 90% 90% 90% 90%
80% 80% 80% 80% 80%
70% 70% 70% 70% 70%
60% 60% 60% 60% 60%
50% 50% 50% 50% 50%
40% 40% 40% 40% 40%
30% 30% 30% 30% 30%
20% 20% 20% 20% 20%
10% 10% 10% 10% 10%
0% 0% 0% 0% 0%
FY2014 FY2015 FY2016 FY2017 FY2018 FY2014 FY2015 FY2016 FY2017 FY2018 FY2014 FY2015 FY2016 FY2017 FY2018 FY2014 FY2015 FY2016 FY2017 FY2018 FY2014 FY2015 FY2016 FY2017 FY2018
Source: UEFA Club Licensing Benchmarking Report / KPMG Data & Analysis
30 The Financial Landscape of European Football
ContentsThe Financial Landscape of European Football > Financial development of European football > Cluster-based analysis
Impressive average club revenue growth but not throughout the ecosystem
The average operating club revenue of all European top-tier leagues has shown significant
Average operating revenue per club by cluster
growth between FY2009 and FY2018, achieving a compound annual growth rate (CAGR) of
180
6.7% for this 10-year period. At first sight, the data presented points to a financially 160,6
successful period for European football that is unparalleled in its long history. However, the 160 151,4
138,7
growth in income has been unequally divided between the various levels of the footballing 140
124,5
pyramid, resulting in greater financial polarisation both between and within leagues. 116,2
120 105,8
96,6
€ million
• Revenue of Cluster A doubled between FY2009 and FY2018, representing an annual 100 91,4
87,9
82,1
CAGR of 7.7% to FY2018. This period was characterised by new, increasingly lucrative 80
broadcasting rights deals, the international expansion of top clubs from these countries
60
and greater UCC income.
40 27,9 28,2 27,4 28,2 29,9 32,2 31,7
19,2 23,5 23,4
• Clusters B, D and E grew revenue by an annual CAGR of 5.7%, 5.9% and 5.2%
20 8,3 9,3 9,5 8,8 8,9 8,7 9,2 9,5 10,3 10,8
respectively between FY2009 and FY2018.
0
• Cluster C recorded only minimal gains: the 11 leagues that make up this group FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
recorded an average annual growth of 3% over the period. Source: UEFA Club Licensing Benchmarking Report / KPMG Data & Analysis
Although at a cluster level CAGR figures show positive growth, there are large variances
Average Annual Growth of Average Operating Revenue per club by
between leagues and clubs within each cluster. For example, between FY2014 and FY2018 cluster from FY2014 to FY2018:
the average annual growth of average revenue per club within the clusters ranged from Clusters Minimum Maximum Range
8.9% to 46.7%, with some leagues experiencing negative annual growth rates (as can be
Cluster A 3.5% 12.4% 8.9%
seen in the table), indicating varied club revenue growth throughout the ecosystem.
Cluster B -1.2% 9.9% 11.1%
Clusters A, B, D and E all had larger differences between the average club revenue of the
Cluster C -1.7% 45.0% 46.7%
top and bottom league in each cluster, indicating polarisation between leagues. This trend
Cluster D -7.9% 32.1% 40.0%
of greater financial polarisation is also reflected at a domestic league level, where the
revenues the top clubs in each country are able to generate, especially those that Cluster E 4.0% 41.7% 37.7%
compete in UCC, are increasing more than their domestic peers. Source: EL Data & Analysis
31 The Financial Landscape of European Football
ContentsThe Financial Landscape of European Football > Financial development of European football > Cluster-based analysis
Financial gaps, especially between top three clusters, have accelerated from 2011-2012
Another way to look at the changes in revenue is to calculate the difference between Gap between Clusters: Total operating revenue
the total revenue per club between clusters directly ‘next to each other’. The objective is 14.000
12.697
to look beyond simple growth rates and identify at which point the development paths 13.000
11.745
of leagues started to diverge. To this end, the chart shows the difference or ‘gap’ 12.000
10.728
between certain clusters. 11.000
9.490
10.000 8.815
• Clusters A-B: The gap between Cluster A and B has been constantly increasing since 9.000
7.717
FY2012. By the end of the 2018 financial year, the gap between all clubs in Cluster A 8.000 6.844
6.758
7.000 6.202 6.412
and B had increased to €12.6 billion, more than doubling from €6.2 billion in 2019.
6.000
• Clusters B-C: Between Clusters B and C, FY2011-2012 saw the gap almost double. 5.000
Over the period, the difference between these clusters has continued to increase to 4.000
a total of €1.4 billion by FY2018.
1.557
€ million
1.600 1.441 1.419
• Clusters C-D and D-E: Between these clusters, although the gap has increased over 1.323
1.400 1.213 1.261 1.213
the period it has remained more stable, ending FY2018 at €1.1 billion and €320 million 1.098 1.083
1.200
respectively. 971
1.000 1.127
1.008 1.057
The gaps, ultimately a function of both league and club development efforts which are 800 932 912 941
912
interdependent, also mirror the dynamics within leagues, where similar levels of financial 600 742 694
polarisation can be seen between the top clubs and the rest in the domestic leagues 400 551
throughout Europe. 200 357 381 333
321 309 310 321
214 259 259
-
An overview of the more recent increase in the growing gap between clusters from FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
FY2014-18 is explored on the following page, while further details of the key reasons and
B-C C-D D-E
drivers for the financial differences between clusters will be explored later in the report.
Source: UEFA Club Licensing Benchmarking Report / KPMG Data & Analysis
32 The Financial Landscape of European Football
ContentsThe Financial Landscape of European Football > Financial development of European football > Cluster-based analysis
Broadcasting, commercial and UCC driving increase of financial gaps
When analysing the more recent trends over a 5-year period (FY2014 – FY2018), except for the gap between clusters D and E, all other clusters experienced an increase over the period concerned,
ranging from 17% to 44%. The key reasons for these changes were centralised (broadcasting, UCC) and individual (commercial) revenues as summarised below:
• Centalised Revenues:
• Broadcasting revenues: With 54% (between Cluster A-B) and 48% growth (between Cluster B-C), the successful broadcast revenue generating strategies of the leagues have
significantly contributed to increasing the gap between these clusters. Besides macro-economic circumstances, the key drivers for broadcasting revenue growth are league/club
professional structures and appeal, media rights tender specifics and the international footprint of the league and their member clubs.
• UCC revenues: As shown in section 2.1, overall, UCC revenues have been growing fastest on a CAGR basis. This growth is reflected in the figures below, which show a 68%, 84% and
129% increase during the 4-year period. The new UCC cycle for 2018-21, with its substantially increased revenues, should see this trend continue, especially for the small fraction of
clubs able to qualify for UCL, due to changes in UEFA’s distribution model which has allocated, in relative terms, much more prize money to a small group of clubs instead of potentially
sharing more of the increased revenues, via solidarity payments, with all European clubs who also contribute to the football ecosystem.
• Individual Revenues: Compared to centralised UCC and broadcasting revenues which are distributed to all participating clubs, commercial revenues are club-specific. Based on the analysis
below, only clubs in Cluster A saw a meaningful increase as the gap between Cluster A-B grew by 57% or, in absolute terms over €2 billion. As we will see in later sections of this report, much of
this growth is concentrated in a handful of the very top clubs.
Clusters’ value drivers comparison, € million
Gap in Total Total revenue Broadcasting revenue Commercial revenue Matchday revenue UCC revenue
revenue
between… FY2014 FY2018 Change % FY2014 FY2018 Change % FY2014 FY2018 Change % FY2014 FY2018 Change % FY2014 FY2018 Change %
Cluster A
8815 12697 44% 4111 6336.8 54% 2096.7 3297 57% 1587.9 1799.4 13% 544.3 915 68%
and B
Cluster B
1213.2 1419 17% 307.5 454.2 48% 565.2 565.8 0.1% 165.5 238.1 44% 49.9 91.8 84%
and C
Cluster C
911.6 1127 24% 133.8 144.4 8% 367.7 420.3 14% 152.2 224.5 48% 55.1 126.3 129%
and D
Cluster D
332.7 321 -4% 45.3 49.4 9% 135 109.3 -19% 28.4 31.3 10% 84 87 4%
and E
Source: UEFA Club Licensing Benchmarking Report KPMG Data & Analysis
33 The Financial Landscape of European Football
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